project management a managerial approach

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PROJECT MANAGEMENT

A Managerial Approach

S E V E N T H E D I T I O N

PROJECT MANAGEMENT

A Managerial Approach

S E V E N T H E D I T I O N

Jack R Meredith

Broyhill Distinguished Scholar and Chair in Operations

Wake Forest University

VICE PRESIDENT & EXECUTIVE PUBLISHER Don Fowley EXECUTIVE EDITOR Beth Golub

ASSOCIATE EDITOR Jen Devine MARKETING MANAGER Carly DeCandia DESIGN DIRECTOR Harry Nolan SENIOR DESIGNER Kevin Murphy SENIOR PRODUCTION EDITOR Patricia McFadden SENIOR MEDIA EDITOR Lauren Sapira

PRODUCTION MANAGEMENT SERVICES Ingrao Associates

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The use of projects and project management continues to grow in our society and its nizations We are able to achieve goals through project organization that could be achieved only with the greatest of difficulty if organized in traditional ways Though project manage-ment has existed since before the days of the great pyramids, it has enjoyed a surge of popu-larity beginning in the 1960s A project put U.S astronaut Neil Armstrong on the moon A project named “Desert Storm” freed the nation of Kuwait An annual project brings us Girl Scout cookies as a sign that winter is just about finished (They were a bit optimistic this year.) The use of project management to accomplish the many and diverse aims of society’s varied organizations continues to grow

orga-Businesses regularly use project management to accomplish unique outcomes with limited resources under critical time constraints In the service sector of the economy, the use of project management to achieve an organization’s goals is even more common Advertising campaigns, voter registration drives, political campaigns, a family’s annual summer vacation, and even man-agement seminars on the subject of project management are organized as projects A relatively new growth area in the use of project management is the use of projects as a way of accomplish-ing organizational change Indeed, there is a rapid increase in the number of firms that use proj-ects as the preferred way of accomplishing almost everything they undertake Not even the most optimistic prognosticators foresaw the explosive growth that has occurred in the field

As the field has grown, so has its literature There are “cookbooks” that describe in detail

the specific steps required to carry out a project, but they do not address the whys nor do they

usually discuss how and why the parts fit together Another type of book focuses on specific subjects important to project managers, team building or scheduling, for example These are quite helpful for team builders or schedulers, but team building and scheduling are only two

of the serious problems a project manager must face There are books that “talk about” ect management—but only occasionally about how to manage a project There are books on earned value calculations, cost estimating, purchasing, project management software, leader-ship, planning information technology (IT) projects, and similar specialized or sub-specialized subjects These are valuable for experienced project managers who can profit from an ad-vanced education in specific areas of knowledge, but one cannot learn to manage projects from these specialized sources There are also handbooks—collections of articles written mainly by academics and consultants on selected topics of interest to project managers Handbooks do not, nor do they pretend to, offer broad coverage of the things project managers need to know

proj-Once the project manager has been educated on the basics of project management, these books often represent valuable collections of relevant readings.

hand-Unfortunately, project management seems to be reentering a stage that we thought had

passed—arguments within the profession (and among those who teach it) about what we really

need to know to manage projects Must we know “how to manage people” or “how to use puters and do quantitative methods”? Lately we have been receiving email from teachers such

com-as the one who urged us to drop “all the math” and pay more attention to conflict resolution, and another who suggested that we cut back on the “touchy-feely stuff and stick with the important things like scheduling and budgeting.” We believe that insight into human behavior, knowledge

of organizational issues, and skill with certain quantitative methods are all necessary (though not necessarily sufficient) for successful project management This book reflects that belief

It addresses project management from a management perspective rather than a

cook-book, special area treatise, or collection of loosely associated articles Such a book should address the basic nature of managing all types of projects—public, business, engineering, information systems, and so on—as well as the specific techniques and insights required to carry out this unique way of getting things done It should deal with the problems of selecting projects, initiating them, and operating and controlling them It should discuss the demands made on the project manager and the nature of the manager’s interaction with the rest of the parent organization The book should cover the difficult problems associated with conduct-ing a project using people and organizations that represent different cultures and may be separated by considerable distances Finally, it should even cover the issues arising when the decision is made to terminate a project

This managerial perspective is the view we have taken here As we noted earlier, we are occasionally advised to “cut the BS,” apparently a reference to any aspect of project manage-ment that is not mathematical, technical, or governed by strict rules of procedure The argu-ment is that “management is just common sense.” It is quite possible that such a statement

is true, but if so, the word “common” is used in the sense of “common carrier”—something available to everyone Sadly, everyone does not seem to have managerial common sense If

everyone did, there would be no market for Scott Adam’s Dilbert—selected illustrations of

which are reproduced here where appropriate

The book is primarily intended for use as a college textbook for teaching project ment at the advanced undergraduate or master’s level The book is also intended for current and prospective project managers who wish to share our insights and ideas about the field We have drawn freely on our personal experiences working with project managers and on the experience

manage-of friends and colleagues who have spent much manage-of their working lives serving as project agers in what they like to call the “real world.” Thus, in contrast to the books described earlier

man-about project management, this book teaches students how to do project management.

As well as being a text that is equally appropriate for classes on the management of vice, product, or engineering projects, we have found that information systems (IS) students

ser-in our classes fser-ind the material particularly helpful for managser-ing their IS projects Thus, we have included some coverage of material concerning information systems and how IS proj-ects differ from and are similar to regular business projects

Given this managerial perspective, we have arranged the book to use the project life cycle as

the primary organizational guideline In this seventh edition we have altered the organization slightly to demark more clearly the activities that occur before the launch of the project,

setting up those activities that have to do with the context (or initiation) of the project in the

Preface     ii

first part of the book, and those that have to do with the planning for the project in the second part Actually executing the project to completion constitutes the third part of the book We

have found it to be a comfortable framework for the reader

Following an introductory chapter that comments on the role and importance of projects

in our society and discusses project management as a potential career for aspiring ers, the book covers the context, events, and issues arising during the management of projects

manag-in the order manag-in which they usually occur manag-in the life of a project Part I, Project Initiation

con-cerns the context of the project, which is crucial for the project manager (PM) to understand if

he or she is to be successful in executing the project It begins with a description of how ects are selected for implementation, frequently based on their tie to the organization’s strategy and goals Part I also covers the many roles and responsibilities of the project manager (PM), the skills the PM needs for handling conflict, and the various ways of setting up the project within the organization’s reporting structure (including how different ways of organizing proj-ects tend to create different problems for PMs and their teams)

proj-Part II, Project Planning then moves into the project planning process starting with the

major tools used in project planning This is followed by project budgeting, project

schedul-ing, and finally, resource allocation among the activities Part III, Project Execution finally gets

into the action, beginning with monitoring the activities, largely through information systems, and then controlling them to assure that the results meet expectations Evaluating and possibly auditing the project at its major milestones or phase-gates is another, though separate, control action that senior management often employs, and last, the project must be terminated

We have relegated the discussion of two important aspects of projects that usually occur very early in the project life cycle—creativity/idea generation and technological forecasting—

to the book’s website Although few project managers engage in either of these tasks cally being appointed to project leadership after these activities have taken place), we believe that a knowledge of these subjects will make the project manager more effective

(typi-Any way chosen to organize knowledge carries with it an implication of neatness and order that rarely occurs in reality We are quite aware that projects almost never proceed in an orderly, linear way through the stages and events we describe here The need to deal with change and uncertainty is a constant task for the project manager We have tried to reflect this in repeated references to the organizational, interpersonal, economic, and technical glitches that create crises in the life cycle of every project, and thus in the life of every project manager

Finally, although we use a life-cycle approach to organization, the chapters include

mate-rial concerning the major areas of the Project Management Body of Knowledge (PMBOK®)

as defined by the Project Management Institute (See Bibliography for Chapter 1.) Anyone wishing to prepare thoroughly in some of these areas may have to go beyond the information covered in this text

Because this book is primarily a textbook, we have included numerous pedagogical aids

to foster this purpose As in earlier editions, short summaries appear at the end of the text

of each chapter, followed by glossaries defining key terms and concepts introduced in the chapter End-of-chapter materials also include review questions and problems revisiting the

materials covered in the chapter The answers (though not the detailed solutions) to the

even-numbered problems are on the book’s Web site There are also sets of conceptual discussion

questions intended to broaden the students’ perspectives and to force them to think beyond

the chapter materials to its implications Finally, there are questions covering the Project Management in Practice application examples located throughout the chapters

As in the past, we include incidents for discussion, which are brief “caselettes” oriented

pri-marily toward the specific subjects covered in the chapter, but sometimes allow use of materials

and concepts covered in earlier chapters New to this edition is a continuing integrative class

proj-ect to respond to requests from users for some type of running case throughout the chapters that

builds on the chapter materials as students progress through the book And at the end of each

chap-ter we offer a reading and/or a case, with questions concerning the reading and/or case at the end

We have noticed that many undergraduate introductory courses, and even a few such graduate courses, have no prerequisites We feel individuals beginning their education in the management of projects would profit with some background knowledge Thus, in writing this text we have made some assumptions about both student and professional readers First, we assume that all readers have taken an elementary course in management or have had equiva-lent experience The reader with a background in management theory or practice will note that many of the principles of good project management are also principles of good general administrative management Project management and administrative management are not en-tirely distinct Further, we assume that readers are familiar with the fundamental principles

of accounting, behavioral science, finance, and statistics as would be a typical manager cause the assumption concerning statistics is not always met, we include Appendix A on the Web site (http://www.wiley.com/college/meredith) This appendix on probability and statis-tics serves as an initial tutorial or as a refresher for rusty knowledge

In this edition, we have made a great many small updates, additions, and changes, including dropping the case in the conflict/negotiation chapter (which no one seemed to use) and add-ing one in the auditing/evaluation chapter, which many requested We also dropped the project management software reading in the information systems chapter since software reviews are never up to date As noted above, we also reorganized the structure of the text slightly by re-grouping the chapters, and moving the conflict/negotiation chapter to earlier in the book Also

new is the continuing integrative class project at the end of every chapter, as noted above The

largest change however is probably the attempt to simplify our writing style, eliminating many

of the references to additional ways to address some of the issues, references to the thoughts of other practitioners and researchers, and references to opposing points of view We hope that this will not only eliminate confusion on the part of students but will also simplify their understand-ing of the basic material—it also helps in reducing the length and cost of the book, of course

When we started writing the first edition of this book around 1980—the first “textbook”

in the field—there weren’t all that many publications addressing project management, so

we tried to document and describe all of them Over the decades however, we were whelmed but still tried to note in the appropriate chapters the major new publications in the field—books, articles, etc The purpose of doing so is, of course, to give the student recourse

over-to additional explanation and discussion, or opposing points of view, or alternative ways of achieving the same objective However, given the tsunami of interest, and publications, in the area since 1980, we have concluded that we must be much more selective, so have tried to cut back substantially in this edition, and will probably do more in the future as well

As before, a student version of Crystal Ball®, an Excel® add-in, again comes with the book This software makes simulation reasonably straightforward and not particularly com-plicated The use of simulation as a technique for risk analysis is demonstrated in several ways in different chapters (Because relatively few students are familiar with simulation software, step-by-step instruction is included in the text.)

Microsoft Project® has become the dominant application software in the field, outselling

Project® is included with every copy of the book Our coverage of software tends, therefore,

to be centered on Microsoft Project® (and on Crystal Ball®), but includes a brief sion of the many “add-ons” that are now available to supplement Microsoft Project® and its competitors Because the various versions of Microsoft Project® are quite similar in the way that they perform most of the basic tasks of project management, we generally do not dif-ferentiate between the versions, referring to any and all simply as Microsoft Project (MSP)

discus-We have also added some exercises to the end-of-chapter material that can utilize computer software Similar materials are also available on the website

Another option now available to educational institutions adopting this Wiley textbook is

a free 3-year membership to the MSDN Academic Alliance The MSDN AA is designed to

provide the easiest and most inexpensive way for academic departments to make the latest Microsoft software available in labs, classrooms, and on student PCs

Microsoft Project 2007 software is available through this Wiley and Microsoft ing partnership, free of charge with the adoption of any qualified Wiley textbook Each copy

publish-of Microspublish-oft Project is the full version publish-of the spublish-oftware, with no time limitations, and can be used indefinitely for educational purposes (The second and subsequent years of a depart-ment’s MSDN AA membership is $399 and may be collected from students via lab fees.) Contact your Wiley sales rep for details For more information about the MSDN AA pro-gram, go to http://msdn.microsoft.com/academic/

There is, of course, the danger that human nature, operating in its normal discreet mode, will shift the task of learning project management to that of learning project management software Projects have often failed because the project manager started managing the soft-ware instead of the project Instructors need to be aware of the problem and must caution students not to fall into this trap

Of course, we have also updated and extended the end-of-chapter pedagogical material We have updated the bibliographies, added additional questions, added new incidents, added some problems (including some now in the Budgeting chapter), and added more cost definitions to the glossary in the Budgeting chapter In response to queries about the cases at the end of the chapters, these typically integrate materials from previous chapters rather than focusing solely

on the content of the chapter where they are placed, though that will be their primary focus

The Instructor’s Resource Guide on the Web site www.wiley.com/college/meredith provides

additional assistance to the project management instructor In addition to the tions to the problems, questions, readings, and cases, this edition includes teaching tips, a computerized test bank, additional cases, and PowerPoint slides All of these valuable re-sources are available online (http://www.wiley.com/college/meredith) In addition, the student Web site contains Web quizzes, PowerPoint® slides, Appendix A: Probability and Statistics, Appendix B: Answers to the Even-Numbered Problems, Creativity and Idea Gen-eration, Technological Forecasting, a Glossary, and a Microsoft Project Manual

We owe a debt of gratitude to all those who have helped us with this book First, we thank the managers and students who helped us solidify our ideas about proper methods for man-aging projects and proper ways of teaching the subject Second, we thank the project teams and leaders in all of our project management classes We are especially grateful to Margaret

Preface     ix

sniff out inconsistencies saved us countless hours of fumbling and potential embarrassment

Last, but never least, we thank Suzanne Ingrao/Ingrao Associates, editor nonpareil and Joyce Franzen/GGS Book Services PMG for seemingly effortless production

Special thanks are due those who have significantly influenced our thinking about project management or supplied materials to help us write this book: Jeffrey Camm, James Evans, Martin Levy, John McKinney and William Meyers, all of the Univ of Cincinnati; Larry Crowley, Auburn Univ.; Jeffrey Pinto, Pennsylvania State Univ at Erie; Gerhard Rosegger, Case Western Reserve Univ.; Stephen Wearne, Univ of Manchester; and the Staff of the Project Management Institute We give a special thank you to Ronny Richardson, South-ern Polytech State Univ.; Dwayne Whitten, Texas A&M Univ.; and Bil Matthews, William Patterson University who authored and /or carefully checked the supplements to this edition

We owe a massive debt of gratitude to the reviewers for previous editions: Kwasi Gyampah, Univ of North Carolina, Greensboro; Nicholas Aquilano, Univ of Arizona; Bob Ash, Indiana Univ., Southeast; Bud Baker, Wright State Univ.; Robert J Berger, Univ of Maryland;

Amoako-William Brauer, Bemidji State Univ.; Maj Mark D Camdle, Air Force Inst of Tech.; Howard Chamberlin, Texas A&M Univ.; Chin-Sheng Chen, Florida International Univ.; Denis Cioffi, George Washington Univ.; Desmond Cook, Ohio State Univ.; Edward Davis, Univ of Virginia;

Burton Dean, San Jose State Univ.; Michael H Ensby, Clarkson Univ.; Richard E Gunther, fornia State Univ., Northridge; William Hayden, Jr., SUNY, Buffalo; Jane E Humble, Arizona State Univ.; Richard H Irving, York Univ.; Roderick V James, DeVry Univ.; David L Keeney, Stevens Inst of Tech.; Ted Klastorin, Univ of Washington; David Kukulka, Buffalo State Univ.;

Cali-William Leban, DeVry Univ.; Sara McComb, Univ of Massachusetts, Amherst; Abe Meilich, Walden Univ.; Jaindeep Motwani, Grand Valley State Univ.; Barin Nag, Towson Univ.; John E

Nicolay, Jr., Univ of Minnesota; David L Overbye, De Vry Univ.; David J Robb, Univ of gary; Arthur C Rogers, City Univ., Washington; Thomas Schuppe, Milwaukee School of Engi-neering; John Shanfi, DeVry Inst of Tech., Irving, TX; Wade Shaw, Florida Inst of Tech.;

Cal-Richard V Sheng, DeVry Inst of Tech., San Marino, CA; Bill Sherrard, San Diego State Univ.;

Joyce T Shirazi, Univ of Maryland, Univ College; Gene Simons, Rensselaer Polytech Inst.;

Herbert Spirer, Univ of Connecticut; Eric Sprouls, Univ of Southern Indiana; Peter Strunk, Univ of Cincinnati; Samuel Taylor, Univ of Wyoming; Tony Trippe, Rochester Inst of Tech.;

Jerome Weist, Univ of Utah; William G Wells, Jr., The George Washington Univ.; James man, Univ of Bridgeport and Charles I Zigelman, San Diego State Univ

Will-For this edition, we thank reviewers Steve Allen, Truman State Univ.; Robert Bergman, Univ of Houston; Susan Cholette, San Francisco Univ.; Mike Ensby, Clarkson Univ.; Abel Fer-nandez, Univ of the Pacific; Homayoun Kahmooshi, George Washington Univ.; Young Hoon Kway, George Washington Univ.; Ardeshir Lohrasbi, Univ of Illinois, Springfield; Mary Meix-ell, Quinnipiac Univ.; Jaideep Motwani, Grand State Valley Univ.; Pat Penfield, Syracuse Univ.;

Ed Pohl, Univ of Arkansas; Michael Poli, Stevens Inst of Tech.; Amit Raturi, Univ of nati; Ronnie Richardson, Southern Polytech State Univ.; David Russo, Univ of Texas, Dallas;

Cincin-Boong-Yeol Ryoo, Florida International Univ.; Ruth Seiple, Univ of Cincinnati; Chris Simber, Stevens Inst of Tech.; Susan Williams, Northern Arizona State Univ

University of Cincinnati

608 Flagstaff DriveCincinnati, OH 45215mantelsj@uc.edu

Chapter 1 projects in Contemporary Organizations 1

1.1 The Definition of a “Project” 9 1.2 Why Project Management? 12 1.3 The Project Life Cycle 14 1.4 The Structure of This Text 18PROJECT MANAGEMENT IN PRACTICE The Olympic Torch Relay Project 12

Demolishing San Francisco’s Bridges Safely 19 DIRECTED READING: Lessons for an Accidental Profession 26

PROJECT INITIATION 35

Chapter 2 Strategic Management and project Selection 37

2.1 Project Management Maturity 39 2.2 Project Selection and Criteria of Choice 40 2.3 The Nature of Project Selection Models 42 2.4 Types of Project Selection Models 44 2.5 Analysis under Uncertainty—The Management of Risk 58 2.6 Comments on the Information Base for Selection 70 2.7 Project Portfolio Process 72

2.8 Project Proposals 80PROJECT MANAGEMENT IN PRACTICEImplementing Strategy through Projects at Blue Cross/Blue Shield 39Project Selection for Spent Nuclear Fuel Cleanup 50

Simulating the Failure of California’s Levees 61Using a Project Portfolio to Achieve 100% On-Time Delivery at Décor Cabinets 73

CASE: Pan Europa Foods S.A 88 DIRECTED READING: From Experience:

Linking Projects to Strategy 96

Contents

Chapter 3 the project Manager 107

3.1 Project Management and the Project Manager 109 3.2 Special Demands on the Project Manager 115 3.3 Selecting the Project Manager 127

3.4 Problems of Cultural Differences 130 3.5 Impact of Institutional Environments 134 3.6 Multicultural Communications and Managerial Behavior 140PROJECT MANAGEMENT IN PRACTICE

The Project Management Career Path at AT&T 114

A Surprise “Director of Storm Logistics” for Katrina 116The Wreckmaster at a New York Subway Accident 124Success at Energo by Integrating Two Diverse Cultures 133Project Management in Brazil during Unstable Times 137 CASE: The National Jazz Hall of Fame 150

DIRECTED READING: What It Takes to Be a Good Project Manager 157

Chapter 4 Negotiation and the Management of Conflict 161

4.1 The Nature of Negotiation 164 4.2 Partnering, Chartering, and Scope Change 165 4.3 Conflict and the Project Life Cycle 169

4.4 Some Requirements and Principles of Negotiation 176PROJECT MANAGEMENT IN PRACTICE

Selling New Area Codes to Consumers Who Don’t Want Them 162

A Consensus Feasibility Study for Montreal’s Archipel Dam 175Negotiation in Action—The Quad Sensor Project 178

DIRECTED READING: Methods of Resolving Interpersonal Conflict 183

5.8 Human Factors and the Project Team 217PROJECT MANAGEMENT IN PRACTICEReorganizing for Project Management at Prevost Car 193Trinatronic, Inc 204

Risk Analysis vs Budget/Schedule Requirements in Australia 206

A Project Management Office Success for the Transportation Security Administration 210

The Empire Uses Floating Multidisciplinary Teams 216South African Repair Success through Teamwork 221

CONTENTS xiii

CASE: Oilwell Cable Company, Inc 227 DIRECTED READING: The Virtual Project: Managing Tomorrow’s Team Today 230

Beagle 2 Mars Probe a Planning Failure 240Child Support Software a Victim of Scope Creep 244Shanghai Unlucky with Passengers 246

Minnesota DOT Project Planning 250Disaster Project Planning in Iceland 260 CASE: A Project Management and Control System for Capital Projects 277

DIRECTED READING: Planning for Crises

in Project Management 286

Chapter 7 Budgeting and Cost estimation 293

7.1 Estimating Project Budgets 294 7.2 Improving the Process of Cost Estimation 305PROJECT MANAGEMENT IN PRACTICEPathfinder Mission to Mars—on a Shoestring 294Managing Costs at Massachusetts’ Neighborhood Health Plan 300Completing the Limerick Nuclear Facility Under Budget 306The Emanon Aircraft Corporation 313

CASE: Automotive Builders, Inc.: The Stanhope Project 322 DIRECTED READING: Three Perceptions of Project Cost 327

Chapter 8 Scheduling 333

8.1 Background 333 8.2 Network Techniques: PERT (ADM) and CPM (PDM) 337 8.3 Risk Analysis Using Simulation with Crystal Ball® 365 8.4 Using these Tools 371

PROJECT MANAGEMENT IN PRACTICEReplacing the Atigun Section of the TransAlaska Pipeline 335Hosting the Annual Project Management Institute

Symposium 362 CASE: The Sharon Construction Corporation 381

Chapter 9 resource allocation 383

9.1 Critical Path Method—Crashing a Project 385 9.2 The Resource Allocation Problem 392

9.3 Resource Loading 394 9.4 Resource Leveling 397 9.5 Constrained Resource Scheduling 402 9.6 Multiproject Scheduling and Resource Allocation 408 9.7 Goldratt’s Critical Chain 415

PROJECT MANAGEMENT IN PRACTICEExpediting Los Angeles Freeway Repairs after the Earthquake 384Architectural Associates, Inc 387

Benefit/Cost Analysis Saves Chicago’s Deep Tunnel Project 393Benefits of Resource Constraining at Pennsylvania Electric 407 CASE: D.U Singer Hospital Products Corp 428

Using Project Management Software to Schedule the Olympic Games 436Drug Counseling Program 442

Tracking Scope Creep: A Project Manager Responds 445Success through Earned Value at Texas Instruments 460 CASE: The Project Manager/Customer Interface 470

Chapter 11 project Control 475

11.1 The Fundamental Purposes of Control 47711.2 Three Types of Control Processes 47911.3 The Design of Control Systems 48811.4 Control: A Primary Function of Management 49611.5 Control of Change and Scope Creep 501

PROJECT MANAGEMENT IN PRACTICEExtensive Controls for San Francisco’s Metro Turnback Project 480Schedule and Cost Control for Australia’s New Parliament House 494Major Scope Creep in Boston’s “Big Dig” 502

Better Control of Development Projects at Johnson Controls 505 CASE: Peerless Laser Processors 510

DIRECTED READING: Controlling Projects According to Plan 515

DIRECTED READING: An Assessment of Postproject Reviews 544

PROJECT MANAGEMENT IN PRACTICENucor’s Approach to Termination by Addition 554Terminating the Superconducting Super Collider Project 560

photo Credits 573 Name Index 575 Subject Index 580

Please visit http://www.wiley.com/college/meredith for Appendices

A: Probability and Statistics and Appendix B: Answers to the Numbered Problems.

Even-CONTENTS xv

The past several decades have been marked by rapid growth in the use of project management

as a means by which organizations achieve their objectives In the past, most projects were external to the organization—building a new skyscraper, designing a commercial ad campaign, launching a rocket—but the growth in the use of projects lately has primarily been

in the area of projects internal to organizations: developing a new product, opening a new branch, improving the services provided to customers As exhilarating as outside projects are, successfully executing internal projects is even more satisfying in that the organization has substantially improved its ability to execute more effi ciently, effectively, or quickly, resulting

in an agency or business that can even better contribute to society while simultaneously enhancing its own competitive strength Project management provides an organization with powerful tools that improve its ability to plan, implement, and control its activities as well as the ways in which it utilizes its people and resources

It is popular to ask, “Why can’t they run government the way I run my business?” In the case of project management, however, business and other organizations learned from government, not the other way around A lion’s share of the credit for the development of the techniques and practices of project management belongs to the military, which faced a series of major tasks that simply were not achievable by traditional organizations operat-ing in traditional ways The United States Navy’s Polaris program, NASA’s Apollo space program, and more recently, the space shuttle and the development of “smart” bombs and missiles are a few of the many instances of the application of these specially developed management approaches to extraordinarily complex projects Following such examples, nonmilitary government sectors, private industry, public service agencies, and volunteer organizations have all used project management to increase their effectiveness Most fi rms

in the computer software business routinely develop their output as projects or groups of projects

Project management has emerged because the characteristics of our contemporary society demand the development of new methods of management Of the many forces involved, three are paramount: (1) the exponential expansion of human knowledge; (2) the growing demand for a broad range of complex, sophisticated, customized goods and services; and (3) the evolution of worldwide competitive markets for the production and consumption of goods

Projects in Contemporary

Organizations

1

and services All three forces combine to mandate the use of teams to solve problems that used

to be solvable by individuals These three forces combine to increase greatly the complexity

of goods and services produced plus the complexity of the processes used to produce them

This, in turn, leads to the need for more sophisticated systems to control both outcomes and processes

Forces Fostering Project Management

First, the expansion of knowledge allows an increasing number of academic disciplines to

be used in solving problems associated with the development, production, and distribution

of goods and services Second, satisfying the continuing demand for more complex and customized products and services depends on our ability to make product design an inte-grated and inherent part of our production and distribution systems Third, worldwide mar-kets force us to include cultural and environmental differences in our managerial decisions about what, where, when, and how to produce and distribute output The requisite knowledge does not reside in any one individual, no matter how well educated or knowledgeable Thus, under these conditions, teams are used for making decisions and taking action This calls for

a high level of coordination and cooperation between groups of people not particularly used

to such interaction Largely geared to the mass production of simpler goods, traditional ganizational structures and management systems are simply not adequate to the task Project management is

or-The organizational response to the forces noted above cannot take the form of an neous transformation from the old to the new To be successful, the transition must be system-atic, but it tends to be slow and tortuous for most enterprises Accomplishing organizational change is a natural application of project management, and many fi rms have set up projects to implement their goals for strategic and tactical change

instanta-Another important societal force is the intense competition among institutions, both profi t and not-for-profi t, fostered by our economic system resulting in organizational “crusades”

such as “total quality control,” “supply chain management,” and particularly prominent these days: “Six-sigma*.” The competition that all of these crusades engenders puts extreme pres-sure on organizations to make their complex, customized outputs available as quickly as possible “Time-to-market” is critical Responses must come faster, decisions must be made sooner, and results must occur more quickly Imagine the communications problems alone

Information and knowledge are growing explosively, but the time permissible to locate and use the appropriate knowledge is decreasing

In addition, these forces operate in a society that assumes that technology can do anything The fact is, this assumption is reasonably true, within the bounds of nature’s fundamental laws The problem lies not in this assumption so much as in a concomitant assumption that allows society to ignore both the economic and noneconomic costs associated with technological progress until some dramatic event focuses our attention on

the costs (e.g., the Chernobyl nuclear accident, the Exxon Valdez oil spill, or the

possibil-ity of global warming) At times, our faith in technology is disturbed by diffi culties and threats arising from its careless implementation, as in the case of industrial waste, but on the whole we seem remarkably tolerant of technological change For a case in point, con-sider California farm workers who waited more than 20 years to challenge a University of California research program devoted to the development of labor-saving farm machinery

*Six-sigma (see Pande et al., 2000; Pyzdek, 2003) itself involves projects, usually of a process improvement type that involves the use of many project management tools (Chapter 8), teamwork (Chapters 5 and 12), quality tools such as

“benchmarking” (Chapter 11), and even audits (Chapter 12).

(Sun, 1984) The acceptance of technological advancement is so strong it took more than two decades to muster the legal attack Consider also the easy acceptance of communication

by e-mail and shopping on the Internet

Finally, the projects we undertake are large and getting larger The modern advertising company, for example, advances from blanket print ads to regionally focused television ads

to personally focused Internet ads As each new capability extends our grasp, it serves as the base for new demands that force us to extend our reach even farther Projects increase in size and complexity because the more we can do, the more we try to do

The projects that command the most public attention tend to be large, complex, disciplinary endeavors Often, such endeavors are both similar to and different from previous projects with which we may be more or less familiar Similarities with the past provide a base from which to start, but the differences imbue every project with considerable risk The complexities and multidisciplinary aspects of projects require that many parts be put together

multi-so that the prime objectives—performance, time (or schedule), and cost—are met

Three Project Objectives

While multimillion-dollar, fi ve-year projects capture public attention, the overwhelming majority of all projects are comparatively small—though nonetheless important to doer and user alike They involve outcomes, or deliverables, such as a new fl oor for a professional basketball team, a new insurance policy to protect against a specifi c casualty loss, a new Web site, a new casing for a four-wheel-drive minivan transmission, a new industrial fl oor cleanser, the installation of a new method for peer-review of patient care in a hospital, even the development of new software to help manage projects The list could be extended almost without limit These undertakings have much in common with their larger counterparts

They are complex, multidisciplinary, and have the same general objectives—performance

(or scope), time, and cost We refer to these as “direct” project objectives or goals.

There is a tendency to think of a project solely in terms of its outcome—that is, its performance But the time at which the outcome is available is itself a part of the outcome,

as is the cost entailed in achieving the outcome The completion of a building on time and on budget is quite a different outcome from the completion of the same physical structure a year late or 20 percent over budget, or both

Indeed, even the concept of performance or scope is more complex than is apparent Much has been written in recent years arguing that, in addition to time, cost, and specifi cations, there

is a fourth dimension to be considered This fourth dimension is the expectations of the ent (see Darnell, 1997), which sometimes tend to increase as the project progresses, known

cli-as “scope creep” (see Chapter 11) One might say that the expectations of the client are not

an additional target, but an inherent part of the project specifi cations However, to consider

the client’s desires as different from the project specifi cations is to court confl ict between client and project team, each of whom has unique ideas about the deliverables’ nature Also,

to separate client desires from project specifi cations creates confl ict because client and team

rarely act in concert The client specifi es a desired outcome Then the project team designs and implements the project Then the client views the result of the team’s ideas Despite

this logic, differences between the client’s expectations and the project team’s designs are

common As a result, meeting the client’s desires may not be well refl ected by the specifi ed

performance of the project The expectations of client and project team should be aligned and integrated throughout the entire project, but rarely are

As a result of the above, we include the nebulous elements of the client’s expectations and desires along with the “specifi ed” performance, as stated in the project proposal, as the total “required performance” objective for the project The three direct project objectives are

PROJECTS IN CONTEMPORARY ORGANIZATIONS 3

shown in Figure 1-1, with the specifi ed project objectives on the axes This illustration implies that there is some “function” that relates them, one to another—and so there is! Although the functions vary from project to project, and from time to time for a given project, we will refer to these relationships, or trade-offs, throughout this book The primary task of the project manager is to manage these trade-offs, along with a fourth, unspecifi ed trade-off that

always exists between the direct project objectives/goals and a set of ancillary (or process)

objectives/goals

In a more basic sense, those with a stake in the project (the project manager, project team, senior management, the client, and other project stakeholders) have an interest in making the project a success In a thorough, empirical research study that we will consider in more detail

in Chapter 12, Shenhar et al (1997) have concluded that project success has four dimensions:

(1) project effi ciency, (2) impact on the customer, (3) the business impact on the organization, and (4) opening new opportunities for the future The fi rst two are clearly part of what we have defi ned as the project’s direct objectives, the latter two are also specifi c objectives of the project and are thus direct goals Ancillary goals include improving the organization’s project management competency and methods, individuals’ increased managerial experience gained through project management, and similar goals

One other crucial, but unstated, element of ancillary trade-offs that a PM must consider

is the health of the project team as well as the rest of the organization The PM cannot burn out the team in an attempt to achieve the direct objectives, nor destroy the organization’s functional departments in an attempt to meet the project’s direct goals Another ancillary ele-

ment is the project’s environment, that is, those things or persons outside the project, and often

outside the sponsoring organization, that affect the project or are affected by it Examples of this environment might be antipollution groups, trade unions, competitive fi rms, and the like

We will deal with these issues in more detail in Chapter 12

From the early days of project management, the direct project objectives of time, cost, and performance (as generally agreed to by the client and the organization actually doing the project) have been accepted as the primary determinants of project success or failure In the past 25 years or so, other direct and ancillary objectives have been suggested These did not replace the traditional time, cost, and performance, but were added as also relevant For the most part, however, Chapters 1–11 will focus mainly on the traditional direct objectives

Cost Performance

Figure 1-1 Direct project goals—perfor mance, cost, time

The Project Manager

While managing the trade-offs, the project manager (PM) is expected to integrate all aspects of the project, ensure that the proper knowledge and resources are available when and where needed, and above all, ensure that the expected results are produced in a timely, cost-effective manner

The complexity of the problems faced by the PM, taken together with the rapid growth

in the number of project-oriented organizations, has contributed to the professionalization of project management One of the major international organizations dedicated to this profession-alization is the Project Management Institute (PMI®, at www.pmi.org), established in 1969 By

1990, the PMI had 7,500 members Five years later, it had grown to over 17,000, and by the end

of 2007 it had exploded to over 260,000 members in more than 171 countries (see Figure 1-2)

This exponential growth is indicative of the rapid growth in the use of projects, but also refl ects the importance of the PMI as a force in the development of project management as a profession

Its mission is to foster the growth of project management as well as “building professionalism”

in the fi eld The Project Management Journal and PM Network magazines were founded by

the PMI to communicate ideas about project management, as well as solutions for commonly encountered problems Another PMI objective is to codify the areas of learning required for competent project management This project management body of knowledge, PMBOK®, is meant to serve as the fundamental basis for education for project managers (Project Manage-ment Institute, 2004) To certify that active project managers understood and could utilize this body of knowledge, PMI initiated a certifi cate of profi ciency called the Project Management Professional (PMP®) that includes a group of education, experience, and testing requirements

to obtain More recently, PMI has added two more certifi cates, one for advanced program managers, called the Program Management Professional (PgMP®), and another for developing project managers, the Certifi ed Associate in Project Management (CAPM®), which has less educational and experience requirements The profession has fl ourished, with the result that

PROJECTS IN CONTEMPORARY ORGANIZATIONS 5

Manage-ment Institute growth history

PMBOK Guide

many colleges and universities offer training in project management and some offer specialized degree programs in the area.

Clearly, rapid growth in the number of project managers and of the PMI membership were the result, not the cause, of tremendous growth in the number of projects being carried out

The software industry alone has been responsible for a signifi cant percent of the growth

Another major source of growth has been the need to control project activity in large tions As the number of nonroutine activities increases in an organization, there is an increased need in senior management to understand and control the system Project management, with its schedules, budgets, due dates, risk assessments, statements of expected outcomes, and people who take responsibility, is a way to meet this need These forces have combined and led to the creation of a project-organized fi rm Much more will be said about project-oriented organizations in Chapter 4

organiza-As we note in the coming chapters, the project manager’s job is not without problems

There is the ever-present frustration of being responsible for outcomes while lacking full authority to command the requisite resources or personnel There are the constant problems

of dealing with the parties involved in any project—senior management, client, project team, and public—all of whom seem to speak different languages and have different objectives

There are the ceaseless organizational and technical “fi res to be fought.” There are vendors who cannot seem to keep “lightning-strike-me-dead” promises about delivery dates This list

of troubles only scratches the surface

Diffi cult as the job may be, most project managers take a considerable amount of pleasure and job satisfaction from their occupation The challenges are many and the risks signifi cant, but so are the rewards of success Project managers usually enjoy organizational visibility, considerable variety in their day-to-day duties, and often have the prestige associated with work on the enterprise’s high-priority objectives The profession, however, is not one for the timid Risk and confl ict avoiders do not make happy project managers Those who can stom-ach the risks and enjoy practicing the arts of confl ict resolution, however, can take substantial monetary and psychological rewards from their work

Trends in Project Management

Many new developments and interests in project management are being driven by quickly changing global markets, technology, and education Global competition is putting pressure

on prices, response times, and product/service innovation Computer and telecommunications technologies along with greater education are allowing companies to respond to these pres-sures, pushing the boundaries of project management into regions where new tools are being developed for types of projects that have never been considered before In addition, the pres-sure for more and more products and services has led to initiating more projects, but with faster life cycles We consider a variety of trends in turn

push to use projects to achieve more strategic goals, and fi ltering existing major projects to make sure that their objectives support the organization’s strategy and mission Projects that

do not have clear ties to the strategy and mission are terminated and their resources are rected to those that do An example of this is given in Section 1.7 where the Project Portfolio Process is described

to use project management to accomplish routine departmental tasks that would previously have been handled as a functional effort This is because lower level management has become aware that projects accomplish their performance objectives within their budget and deadline,

and hope to employ this new tool to improve management of their functions As a result, artifi cial deadlines and budgets are created to accomplish specifi c, though routine, tasks within the functional departments, a process called “projectizing.” However, as reported by

Jared Sandberg (Sandberg, 2007) in the Wall Street Journal, there is an important danger with

this new tactic If the deadline isn’t really important and the workers fi nd out it is only artifi cial (e.g., either by meeting it but getting no appreciation or missing it but with no penalty), this will destroy the credibility of any future deadlines or budgets, much like “the boy who cried wolf.”

efforts are being pursued to improve the results of project management, whether strategic or

routine One well-known effort is the creation of a formal Project Management Offi ce (PMO,

see Section 4.6) in many organizations, which is responsible for the successful initiation and completion of projects throughout the organization Another effort is the evaluation of an

organization’s project management “maturity,” or skill and experience in managing projects

(discussed in Section 2.1) This is often one of the responsibilities of the PMO Another

responsibility of the PMO is to educate project managers about the ancillary goals of the

orga-nization (mentioned earlier in this chapter), which automatically become a part of the goals of every project whether the project manager knows it or not Achieving better control over each project through the use of phase gates (Sections 5.1, 5.5, 11.2), earned value (Section 10.3), critical ratios (Section 11.3), and other such techniques is also a current trend

projects now involve global teams with team members operating in different countries and different time zones, each bringing a unique set of talents to the project These are known

as virtual projects because the team members may never physically meet before the team

is disbanded and another team reconstituted Advanced telecommunications and computer technologies allow such virtual projects to be created, conduct their work, and complete their project successfully

departments, project management is now being extended into areas where the fi nal mance (or “scope”) requirements may not be understood, the time deadline unknown, and/or the budget undetermined This ill-defi ned type of project (which we call a “quasi-project”) is extremely diffi cult to manage and is often initiated by setting an artifi cial due date and budget, and then completed by “de-scoping” the required performance to meet those limits However, new tools for these kinds of quasi-projects are now being developed—prototyping, phase- gating, and others—to help these teams achieve results that satisfy the customer in spite of all the unknowns

perfor-Recent Changes in Managing Organizations

In the two decades since the fi rst edition of this book was published, the process of managing organizations has been impacted by three revolutionary changes First, we have seen an accel-erating replacement of traditional, hierarchical management by consensual management Sec-ond, we are currently witnessing the adoption of the “systems approach” (sometimes called

“systems engineering”) to deal with organizational or technological problems because it is abundantly clear that when we act on one part of an organization or system, we are certain to affect other parts Third, we have seen organizations establishing projects as the preferred way

to accomplish their goals Examples vary from the hundreds of projects required to plish the “globalization” of a multibillion dollar household products fi rm to the incremental tailoring of products and services for individual customers We elaborate on this tie between

accom-PROJECTS IN CONTEMPORARY ORGANIZATIONS 7

the organization’s goals and the projects it selects for implementation in the following chapter

And as we will note in Chapter 4 and elsewhere, there has been a rapid and sustained growth

in the number of organizations that use projects to accomplish almost all of the nonroutine tasks they undertake While all three of these phenomena have been known for many years, it

is comparatively recent that they have been widely recognized and practiced

In his fascinating book, Rescuing Prometheus (Hughes, 1998), technology historian Thomas

Hughes examines four large-scale projects that required the use of a nontraditional management style, a nontraditional organizational design, and a nontraditional approach to problem solving

in order to achieve their objectives These huge projects—the Semiautomatic Ground ment (SAGE) air defense system, the Atlas Intercontinental Ballistic Missile, the Boston Central Artery/Tunnel, and the Department of Defense Advanced Research Projects Agency’s Internet (ARPANET)—are all characterized by extraordinarily diverse knowledge and information input requirements.* The size and technological complexity of these projects required input from

Environ-a lEnviron-arge number of Environ-autonomous orgEnviron-anizEnviron-ations—governmentEnviron-al, industriEnviron-al, Environ-and Environ-acEnviron-ademic—thEnviron-at usually did not work cooperatively with other organizations, were sometimes competitors, and could be philosophical and/or political opponents Further, any actions taken to deal with parts

of the total project often had disturbing impacts on many other parts of the system

Obviously, these projects were not the fi rst complex, large-scale projects carried out in this country or elsewhere For example, the Manhattan Project—devoted to the development

of the atomic bomb—was such a project The Manhattan Project, however, was the sole and full-time work for a large majority of the individuals and organizations working on it The organizations contributing to the projects Hughes describes were, for the most part, working

on many other tasks For example, Massachusetts Institute of Technology (MIT), the tagon, IBM, Bell Labs (now Lucent Technologies), RAND Corporation, the Massachusetts Department of Highways, and a great many other organizations were all highly involved in one or more of these projects while still carrying on their usual work The use of multiple organizations (both within and outside of the sponsoring fi rm) as contributors to a project is no longer remarkable Transdisciplinary projects are more the rule than the exception

Pen-These revolutions and modifi cations in the style of management and organization of projects will be refl ected throughout this book For example, we have come to believe that the use of a traditional, hierarchical management style rather than a consensual style to man-age multiorganizational projects is a major generator of confl ict between members of the project team We have long felt, and are now certain, that staffi ng multidisciplinary projects with individuals whose primary focus is on a specifi c discipline rather than on the problem(s) embodied in the project will also lead to high levels of interpersonal confl ict between project team members In Chapter 4 we will discuss some issues involved in the widespread use

of projects to accomplish organizational change As in the fi rst edition, we adopt a systems approach to dealing with the problems of managing projects

This book identifi es the specifi c tasks facing PMs We investigate the nature of the projects for which the PM is responsible, the skills that must be used to manage projects, and the means

by which the manager can bring the project to a successful conclusion in terms of the three primary criteria: performance, time, and cost Before delving into the details of this analy-sis, however, we clarify the nature of a project and determine how it differs from the other activities that are conducted in organizations We also note a few of the major advantages, disadvantages, strengths, and limitations of project management At this end of this chapter,

we describe the approach followed throughout the rest of the book

*Hughes’s term for this is “transdisciplinary” (across disciplines), which is rather more accurate than the usual “interdisciplinary” (between disciplines).

1.1 THE DEFINITION OF A “PROJECT”

The PMI has defi ned a project as “A temporary endeavor undertaken to create a unique uct or service” (Project Management Institute, 2004, p 5) There is a rich variety of projects

prod-to be found in our society Although some may argue that the construction of the Tower of Babel or the Egyptian pyramids were some of the fi rst “projects,” it is probable that cave-men formed a project to gather the raw material for mammoth stew It is certainly true that the construction of Boulder Dam and Edison’s invention of the light bulb were projects by any sensible defi nition Modern project management, however, is usually said to have begun with the Manhattan Project In its early days, project management was used mainly for very large, complex research and development (R & D) projects like the development of the Atlas Intercontinental Ballistic Missile and similar military weapon systems Massive construction programs were also organized as projects—the construction of dams, ships, refi neries, and freeways, among others

As the techniques of project management were developed, mostly by the military, the use of project organization began to spread Private construction fi rms found that project organization was helpful on smaller projects, such as the building of a warehouse or an apart-ment complex Automotive companies used project organization to develop new automobile models Both General Electric and Pratt & Whitney used project organization to develop new jet aircraft engines for airlines, as well as the Air Force Project management has even been used to develop new models of shoes and ships (though possibly not sealing wax) More recently, the use of project management by international organizations, and especially orga-nizations producing services rather than products, has grown rapidly Advertising campaigns, global mergers, and capital acquisitions are often handled as projects, and the methods have spread to the nonprofi t sector Weddings, scout-o-ramas, fund drives, election campaigns, parties, and recitals have all made use of project management Most striking has been the widespread adoption of project management techniques for the development of computer software

In discussions of project management, it is sometimes useful to make a distinction

between terms such as project, program, task, and work packages The military, source of most of these terms, generally uses the term program to refer to an exceptionally large, long-

range objective that is broken down into a set of projects These projects are divided further

into tasks, which are, in turn, split into work packages that are themselves composed of work

units But exceptions to this hierarchical nomenclature abound The Manhattan Project was

a huge “program,” but a “task force” was created to investigate the many potential futures of

a large steel company In the broadest sense, a project is a specifi c, fi nite task to be plished Whether large- or small-scale or whether long- or short-run is not particularly rele-vant What is relevant is that the project be seen as a unit There are, however, some attributes that characterize projects

accom-Importance

The most crucial attribute of a project is that it must be important enough in the eyes of senior management to justify setting up a special organizational unit outside the routine structure of the organization If the rest of the organization senses, or even suspects, that it is not really that important, the project is generally doomed to fail The symptoms of lack of importance are numerous and subtle: no mention of it by top management, assigning the project to someone of low stature or rank, adding the project to the responsibilities of someone who is already too overworked, failing to monitor its progress, failing to see to its resource needs, and so on

1.1 THE DEFINITION OF A “PROJECT” 9

A project is usually a one-time activity with a well-defi ned set of desired end results (We discuss poorly defi ned, or “quasi-” projects a bit later.) It can be divided into subtasks that must be accomplished in order to achieve the project goals The project is complex enough that the subtasks require careful coordination and control in terms of timing, precedence, cost, and performance Often, the project itself must be coordinated with other projects being carried out by the same parent organization

Life Cycle with a Finite Due Date

Like organic entities, projects have life cycles From a slow beginning they progress to a buildup of size, then peak, begin a decline, and fi nally must be terminated by some due date (Also like organic entities, they often resist termination.) Some projects end by being phased into the normal, ongoing operations of the parent organization The life cycle is discussed further in Section 1.3 where an important exception to the usual description of the growth curve is mentioned There are several different ways in which to view project life cycles These will be discussed in more detail later

Interdependencies

Projects often interact with other projects being carried out simultaneously by their parent organization Typically, these interactions take the form of competition for scarce resources between projects, and much of Chapter 9 is devoted to dealing with these issues While such interproject interactions are common, projects always interact with the parent organization’s standard, ongoing operations Although the functional departments of an organization (mar-keting, fi nance, manufacturing, and the like) interact with one another in regular, patterned ways, the patterns of interaction between projects and these departments tend to be change-able Marketing may be involved at the beginning and end of a project, but not in the middle

Manufacturing may have major involvement throughout Finance is often involved at the ginning and accounting (the controller) at the end, as well as at periodic reporting times The

be-PM must keep all these interactions clear and maintain the appropriate interrelationships with all external groups

Uniqueness

Though the desired end results may have been achieved elsewhere, they are at least unique

to this organization Moreover, every project has some elements that are unique No two construction or R & D projects are precisely alike Though it is clear that construction projects are usually more routine than R & D projects, some degree of customization is a characteristic

of projects In addition to the presence of risk, as noted earlier, this characteristic means that projects, by their nature, cannot be completely reduced to routine The PM’s importance is

emphasized because, as a devotee of management by exception, the PM will fi nd there are a

great many exceptions to manage by

Confl ict

More than most managers, the PM lives in a world characterized by confl ict Projects compete with functional departments for resources and personnel More serious, with the growing proliferation of projects, is the project-versus-project confl ict for resources within multiproject organizations The members of the project team are in almost constant confl ict for the project’s resources and for leadership roles in solving project problems The PM must be expert in confl ict resolution, but we will see later that there are helpful types of confl ict The PM must recognize the difference

The four parties-at-interest or “stakeholders” (client, parent organization, project team, and the public) in any project even defi ne success and failure in different ways (see Chapters

12 and 13) The client wants changes, and the parent organization wants profi ts, which may

be reduced if those changes are made Individuals working on projects are often responsible to two bosses at the same time; these bosses may have different priorities and objectives Project management is no place for the timid

Nonprojects and Quasi-Projects

If the characteristics listed above defi ne a project, it is appropriate to ask if there are ects There are The use of a manufacturing line to produce a fl ow of standard products is a nonproject The production of weekly employment reports, the preparation of school lunches, the delivery of mail, the fl ight of Delta-1288 from Dallas to Dulles, checking your e-mail, all are nonprojects While one might argue that each of these activities is, to some degree, unique,

nonproj-it is not their uniqueness that characterizes them They are all routine They are tasks that are

performed over and over again This is not true of projects Each project is a one-time event

Even the construction of a section of interstate highway is a project No two miles are alike and constructing them demands constant adaptation to the differences in terrain and substruc-ture of the earth on which the roadbed is to be laid Projects cannot be managed adequately by the managerial routines used for routine work

In addition to projects and nonprojects, there are also quasi-projects: “Bill, would you look into this?” “Judy, we need to fi nish this by Friday’s meeting.” “Can you fi nd out about this before we meet with the customer?” Most people would consider that they have just been assigned a project, depending on who “we” and “you’’ is supposed to include Yet there may be

no specifi c task identifi ed, no specifi c budget given, and no specifi c deadline defi ned Are they still projects, and if so, can project management methods be used to manage them? Certainly!

The performance, schedule, and budget have been implied rather than carefully delineated by the words “this,” “meet,” and “we” (meaning “you”) or “you” (which may mean a group or team) In such cases, it is best to try to quickly nail down the performance, schedule, and bud-get as precisely as possible, but without antagonizing the manager who assigned the project

You may need to ask for additional help or other resources if the work is needed soon—is it needed soon? How accurate/thorough/detailed does it need to be? And other such questions

One common quasi-project in the information systems area is where the project includes discovery of the scope or requirements of the task itself (and possibly also the budget and deadline) How can you plan a project when you don’t know the performance requirements?

In this case, the project is, in fact, determining the performance requirements (and possibly the budget and deadline also) If the entire set of work (including the discovery) has been assigned to you as a project, then the best approach is to set this determination as the fi rst

“milestone” in the project, at which point the resources, budget, deadline, capabilities, sonnel, and any other matters will be reviewed to determine if they are suffi cient to the new project requirements Alternatively, the customer may be willing to pay for the project on a

per-“cost-plus” basis, and call a halt to the effort when the benefi ts no longer justify the cost

1.1 THE DEFINITION OF A “PROJECT” 11

1.2 WHY PROJECT MANAGEMENT?

The basic purpose for initiating a project is to accomplish specifi c goals The reason for organizing the task as a project is to focus the responsibility and authority for the attainment of the goals on an individual or small group In spite of the fact that the PM often lacks authority

Project Management in Practice

The Olympic Torch Relay Project

Getting the Olympic Flame, known as the Olympic

Torch Relay, to the Salt Lake City, Utah, USA 2002

Olympic Games promised to be no simple matter

Generally, the Torch Relay has gotten longer and more

complex with every Olympic event This complexity

is driven by the realization of host-country citizens

that it is a rare opportunity to have the Olympic torch

pass through your hometown and the corresponding

goal of the Olympic Committee to touch as many

lives as possible in a positive way

Planning for the 1996 Atlanta Olympic Torch Relay

(see fi gure) took two years, cost over $20 million, and

involved an 84 day, 42 state campaign using 10,000

runners to carry the torch for 15,000 miles!

Accompa-nying the runners was a 40-vehicle caravan carrying

security offi cers, media personnel, medical

person-nel, computers, telecommunications gear, clothing,

food, and spare lanterns with extra fl ames in case the

original torch went out The caravan included: 50 lular telephones; 60 pagers; 120 radios; 30 cars; 10 motorcycles; and clothing for 10,000 runners, 10,000 volunteers, as well as 2,500 escort runners

cel-However, the torch relay is also a major marketing campaign, primarily for the relay’s sponsors Thus, accompanying the Atlanta-bound caravan were trucks hawking Olympic memorabilia: t-shirts, sweatshirts, baseball caps, tickets to the soccer matches, and on and on In addition to retail commercialism, a number

of companies were piggybacking on the torch relay to further their own commercial interests: IBM, Motor-ola, BellSouth, Texaco, BMW, Lee, Coca-Cola, and

so on All in all, a very successful relay!

Source: G Ruffenach, “Getting the Olympic Flame to Atlanta

Won’t Be a Simple Cross-Country Run,” The Wall Street Journal,

February 26, 1996.

Los Angeles

Seattle

Chicago

Atlanta

at a level consistent with his or her responsibility, the manager is expected to coordinate and integrate all activities needed to reach the project’s goals In particular, the project form of or-ganization allows the manager to be responsive to: (1) the client and the environment, (2) iden-tify and correct problems at an early date, (3) make timely decisions about trade-offs between confl icting project goals, and (4) ensure that managers of the separate tasks that comprise the project do not optimize the performance of their individual tasks at the expense of the total project—that is, that they do not suboptimize.

Actual experience with project management (such as through the currently popular Six-Sigma projects) indicates that the majority of organizations using it experience better control and better customer relations (Davis, 1974), and probably an increase in their project’s return on investment (Ibbs et al., 1997) A signifi cant proportion of users also report shorter development times, lower costs, higher quality and reliability, and higher profi t margins Other reported advantages include a sharper orientation toward results, better interdepartmental coordination, and higher worker morale

On the negative side, most organizations report that project management results in greater organizational complexity Many also report that project organization increases the likelihood that organizational policy will be violated—not a surprising outcome, considering the degree

of autonomy required for the PM A few fi rms reported higher costs, more management

dif-fi culties, and low personnel utilization As we will see in Chapter 5, the disadvantages of project management stem from exactly the same sources as its advantages The disadvantages seem to be the price one pays for the advantages On the whole, the balance weighs in favor

of project organization if the work to be done is appropriate for a project

The tremendous diversity of uses to which project management can be put has had an interesting, and generally unfortunate, side-effect While we assert that all projects are to some extent unique, there is an almost universal tendency for those working on some specifi c types

of projects to argue, “Software (or construction, or R & D, or marketing, or machine nance, or ) projects are different and you can’t expect us to schedule (or budget, or organize,

mainte-or manage, mainte-or ) in the same way that other kinds of projects do.” Disagreement with such pleas for special treatment is central to the philosophy of this book The fundamental similari-ties between all sorts of projects, be they long or short, product- or service-oriented, parts of all-encompassing programs or stand-alone, are far more pervasive than are their differences

There are also real limitations on project management For example, the mere creation of

a project may be an admission that the parent organization and its managers cannot plish the desired outcomes through the functional organization Further, confl ict seems to be

accom-a necessaccom-ary side-effect As we noted, the PM often laccom-acks accom-authority thaccom-at is consistent with the assigned level of responsibility Therefore, the PM must depend on the goodwill of managers

in the parent organization for some of the necessary resources Of course, if the goodwill is not forthcoming, the PM may ask senior offi cials in the parent organization for their assis-tance But to use such power often refl ects poorly on the skills of the PM and, while it may get cooperation in the instance at hand, it may backfi re in the long run

We return to the subject of the advantages, disadvantages, and limitations of the project form of organization later For the moment, it is suffi cient to point out that project management

is diffi cult even when everything goes well When things go badly, PMs have been known to turn gray overnight and take to hard drink! The trouble is that project organization is the only feasible way to accomplish certain goals It is literally not possible to design and build a major weapon system, for example, in a timely and economically acceptable manner, except by proj-ect organization The stronger the emphasis on achievement of results in an organization, the more likely it will be to adopt some form of project management The stake or risks in using project management may be high, but no more so than in any other form of management And for projects, it is less so Tough as it may be, it is all we have—and it works!

1.2 WHY PROJECT MANAGEMENT? 13

All in all, the life of a PM is exciting, rewarding, at times frustrating, and tends to be at the center of things in most organizations Project management is now being recognized as

a “career path” in a growing number of fi rms, particularly those conducting projects with lives extending more than a year or two In such organizations, PMs may have to function for several years, and it is important to provide promotion potential for them It is also common for large fi rms to put their more promising young managers through a “tour of duty” during which they manage one or more projects (or parts of projects) This serves as a good test of the aspiring manager’s ability to coordinate and manage complex tasks and to achieve results

in a politically challenging environment where negotiation skills are required

Most projects go through similar stages on the path from origin to completion We defi ne

these stages, shown in Figure 1-3, as the project’s life cycle The project is born (its start-up

phase) and a manager is selected, the project team and initial resources are assembled, and the work program is organized Then work gets under way and momentum quickly builds

Progress is made This continues until the end is in sight But completing the fi nal tasks seems

to take an inordinate amount of time, partly because there are often a number of parts that must come together and partly because team members “drag their feet” for various reasons and avoid the fi nal steps

The pattern of slow-rapid-slow progress toward the project goal is common Anyone who has watched the construction of a home or building has observed this phenomenon For the most part, it is a result of the changing levels of resources used during the successive stages of the life cycle Figure 1-4 shows project effort, usually in terms of person-hours or resources expended per unit of time (or number of people working on the project) plotted against time, where time is broken up into the several phases of project life Minimal effort is required at the beginning, when the project concept is being developed and subjected to project selection processes (Later, we will argue that increasing effort in the early stages of the life cycle will improve the chance of project success.) Normally there is a strong correlation between the life-cycle progress curve of Figure 1-3 and the effort curve of Figure 1-4 because effort usu-ally results in corresponding progress (although not always) Hence the mathematical deriva-tive of the former tends to resemble the latter (Cioffi , 2004) Moreover, since the effort curve

is generally nonsymmetrical, the progress curve will in general not be symmetrical either

Activity increases as planning is completed and the real work of the project gets way This rises to a peak and then begins to taper off as the project nears completion, fi nally DILBERT: © Scott Adams/Dist by United Feature Syndicate, Inc.

under-ceasing when evaluation is complete and the project is terminated While this rise and fall of effort always occurs, there is no particular pattern that seems to typify all projects, nor any reason for the slowdown at the end of the project to resemble the buildup at its beginning

Some projects end without being dragged out, as is shown in Figure 1-4 Others, however, may be like T S Eliot’s world, and end “not with a bang but a whimper,” gradually slowing down until one is almost surprised to discover that project activity has ceased In some cases, the effort may never fall to zero because the project team, or at least a cadre group, may be maintained for the next appropriate project that comes along The new project will then rise, phoenix-like, from the ashes of the old

The ever-present goals of meeting performance, time, and cost are the major erations throughout the project’s life cycle It was generally thought that performance took

consid-1.3 THE PROJECT LIFE CYCLE 15

and termination Planning, scheduling,

monitoring, control Selection

Conception

Peak effort level

Figure 1-4 Time bution of project effort

distri-precedence early in the project’s life cycle This is the time when planners focus on fi nding the specifi c methods required to meet the project’s performance goals We refer to these methods

as the project’s technology because they require the application of a science or art.

When the major “how” problems are solved, project workers sometimes become preoccupied with improving performance, often beyond the levels required by the original specifi cations

This search for better performance delays the schedule and pushes up the costs

At the same time that the technology of the project is defi ned, the project schedule is designed and project costs are estimated Just as it was thought that performance took prece-dence over schedule and cost early in the life cycle, cost was thought to be of prime importance during the periods of high activity, and then schedule became paramount during the fi nal stages, when the client demanded delivery This conventional wisdom turns out to be untrue Recent

research indicates that performance and schedule are more important than cost during all stages

The reality of time-cost-performance trade-offs will be discussed in greater detail in Chapter 3

Figure 1-3 presents the conventional view of the project life cycle There are, however, many projects that have a life cycle quite different from the S-shaped Figure 1-3, conventional wisdom

to the contrary Remember that Figure 1-3 shows “percent project completion” as a function

of “time.” The life-cycle function is essentially unchanged if, for the horizontal axis, we use

“resources” instead In effect, the life cycle shows what an economist might call “return on input,” that is, the amount of project completion resulting from inputs of time or resources While the S-shaped return curve refl ects reality on many projects, it is seriously misleading for others

For example, consider your progress toward getting a degree, which is usually specifi ed,

in large part, by the number of credit hours for courses successfully passed For smooth gress toward the degree, the life-cycle “curve” would probably resemble a stairstep, each level portion representing a term of study and the step up representing completion of credit toward the degree Summer vacation would, of course, be a longer level stair continuing into the fall term Passing a crucial licensing exam, such as the Certifi ed Public Accountant (CPA), the bar exam for attorneys, or even an electrician’s or plumber’s certifi cation, might appear as a long

pro-fl at line along the horizontal axis with a spike at the time of passing the exam; of course, the effort curve of Figure 1-4 would look completely different

Another type of life-cycle curve might be the installation of a new technology consisting of multiple parts, where each independent part resulted in different incremental benefi ts In these cases, organizations prefer to install those parts resulting in “the biggest bang for the buck” fi rst,

so the resulting life-cycle curve would show great progress at fi rst, and slightly less next, and tinual dwindling off as the remaining parts were installed, essentially concave with “decreasing returns to scale,” as the economists call it And there might even be an “inverse S-curve” repre-senting fast progress at fi rst, a slowdown in the middle, and then speeding up again at the end

con-A particularly important alternative life cycle shape can be captured by the analogy of baking

a cake Once the ingredients are mixed, we are instructed to bake the cake in a 350 (F) oven for

35 minutes At what point in the baking process do we have “cake?” Experienced bakers know that the mixture changes from “goop” (a technical term well known to bakers and cooks) to

“cake” quite rapidly in the last few minutes of the baking process The life cycle of this process looks like the curve shown in Figure 1-5 A number of actual projects have a similar life cycle, for example, some computer software projects, or chemistry and chemical engineering projects

In general, this life cycle often exists for projects in which the output is composed or constructed

of several subunits (or subroutines) that have little use in and of themselves, but are quite useful

when put together This life-cycle curve would also be typical for projects where a chemical-type reaction occurs that rapidly transforms the output from useless to useful—from goop to cake

Another example is the preparation of the manuscript for the current edition of this book A great deal of information must be collected, a great deal of rewriting must be done and new materials gathered, but there is no visible result until everything is assembled

Figure 1-3 shows that, as the project nears completion, continued inputs of time or resources result in successively smaller increments of completion—diminishing marginal returns Figure 1-5 shows the opposite As these projects near completion, additional inputs result in successively larger increments of progress—increasing marginal returns, obviously bounded at 100 percent completion In Chapter 7, we will see that the distinction between these types of life cycles plays a critical role in developing budgets and schedules for projects

It is not necessary for the PM to estimate the precise shape of the life-cycle curve, but the PM must know which type of project life cycle applies to the project at hand

There is another comparison between the two types of project life cycles that is tive For the S-shaped life cycle in Figure 1-3, percentage of project completion is closely correlated with cost, or the use of resources In fact, this is the basis for the use of “earned value,” a technique for monitoring project progress that we will describe in more detail in Chapter 10 However, for the exponential progress curve in Figure 1-5, the expenditure of resources has little correlation with progress, at least in terms of fi nal benefi t

instruc-Finally, not only does the shape of the project life-cycle curve fail to conform to a neat,

single shape—there are also several different ways in which a project life cycle can be viewed

and understood We might view the project life cycle as a control system, as a mechanism to

control quality, as a way of organizing the management of risk, and as a collection of small projects within larger projects within still larger projects Each of these views of a project’s life is useful to the project manager These will be discussed in later chapters

Risk During the Life Cycle

It would be a great source of comfort if one could predict with certainty, at the start of a project, how the performance, time, and cost goals would be met In a few cases, routine con-struction projects, for instance, we can generate reasonably accurate predictions, but often we cannot There may be considerable uncertainty about our ability to meet project goals The crosshatched portion of Figure 1-6 illustrates that uncertainty

Figure 1-6 shows the uncertainty as seen at the beginning of the project Figure 1-7 shows how the uncertainty decreases as the project moves toward completion From project start time,

t0, the band of uncertainty grows until it is quite wide by the estimated end of the project As the project actually develops, the degree of uncertainty about the fi nal outcome is reduced (See the

estimate made at t1, for example.) A later forecast, made at t2, reduces the uncertainty further It is common to make new forecasts about project performance, time, and cost either at fi xed intervals

in the life of the project or when specifi c technological milestones are reached In any event, the more progress made on the project, the less uncertainty there is about achieving the fi nal goal

Note that the focus in Figures 1-6 and 1-7 is on the uncertainty associated with project cost—precisely, the uncertainty of project cost at specifi c points in time Without signifi cantly

1.3 THE PROJECT LIFE CYCLE 17

Figure 1-5 Another possible project life cycle

0

Time 100

altering the shapes of the curves, we could exchange titles on the axes The fi gures would then show the uncertainty associated with estimates of the project schedule, given specifi c levels

of expenditure The relationship between time and cost (and performance) is emphasized throughout this book Dealing with the uncertainty surrounding this relationship is a major responsibility of the PM

This book, a project in itself, has been organized to follow the life cycle of all projects It begins with the creative idea that launches most projects and ends with termination of the project This approach is consistent with our belief that it is helpful to understand the entire process of project management in order to understand and manage its parts Another charac-teristic of the book also relates to the process of project management: some topics, such as

“procurement,” can largely be treated as stand-alone issues, discussed in a single appropriate place in the book, and then dispensed with Other topics however, such as “risk,” or “plan-ning,” arise throughout the book and are treated wherever they are relevant, which may be quite often To attempt to treat them in a single section, or chapter, would be misleading In addition, although this book is intended primarily for the student who wants to study project

Figure 1-6 Estimate of project cost:

estimate made at project start

Time

Figure 1-7 Estimates of project

cost: estimates made at time t0, t1,

and t2

The Central Freeway Viaduct in downtown San

Fran-cisco suffered major structural damage during the

1989 Loma Prieta earthquake and recently had to be

safely demolished The task was complicated because

the bilevel, multispan bridge passed within six feet of

heavily populated buildings, ran in the vicinity of both

overhead and underground utilities (gas, water,

elec-tric, and sewer lines), and crossed both commercial

and residential areas with strict vibration and sound

level restrictions Thus, managing the demolition

while ensuring the safety of both the on-going

popu-lation and existing facilities was a major challenge

The primary tools for conducting such a delicate, but dangerous, operation were detailed planning and

thorough communications with all related parties An

extensive Demolition Plan was required and included:

• a Code of Safe Practice describing personal protective equipment for the workers, as well

as a maintenance plan for the equipment;

• a Code of Safe Practice describing personal protective equipment for the workers, as well

as a maintenance plan for the equipment;

• a dust control plan

• work-hour schedule

• noise-level monitoring

• load determinations and structural analyses

Most of the demolition was accomplished using a breaker on the upper deck of the bridge and a pulver-izer on the lower deck First the roadway slab was demolished, then the girders were pulverized and all the debris pushed down to the ground Then the cap, columns, and restrainers were demolished This pro-cess continued along the length of the bridge until the entire distance was demolished Constant monitoring was conducted for noise, vibration, safety, and pro-cedures throughout the project Continuous commu-nication was made with utility companies and others concerned with a particular segment being demolished

In this fashion, the entire viaduct was demolished with

no major accidents or injuries

Source: O Y Abudayyeh, “Safety Issues in Bridge Demolition

Projects: A Case Study,” PM Network, January 1997, pp 43–45.

Project Management in Practice

Demolishing San Francisco’s Bridges Safely

1.4 THE STRUCTURE OF THIS TEXT 19

management, we feel it can also be of value to the prospective or acting PM, and to senior managers who initiate projects and select, work with, or manage PMs Therefore, our interests often go beyond the issues of primary concern to beginning students.

Most actual projects will not be of the size and complexity addressed in many of our cussions Though our intent was not to confi ne our remarks only to large engineering-oriented projects, these are typically the most complex and place the greatest demands on project man-agement Smaller, simpler projects may therefore not require the depth of tools and techniques

dis-we will present, but the student or manager should be aware that such tools exist

Project management actually begins with the initial concept for the project We feel that this aspect of project management is so important, yet so universally ignored in books on project management, that we included two appendices covering this area in previous editions

of this book In one appendix we discussed creativity and idea generation In another, we described some of the techniques of technological forecasting While our notion about the

importance of these subjects is unchanged, the location of the two appendices has been moved from the end of this work to the Internet The complete text of both appendices now appears in

www.wiley.com/college/meredith/ (along with other items noted in the preface to this edition)

We realize that these topics may be of more direct interest to the senior manager than the PM

Though a PM may prefer to skip this material, since what is past is past, we believe that tory holds lessons for the future Wise PMs will wish to know the reasons for, and the history behind, the initiation of their project

his-In years past, there were arguments between those who insisted that project management was primarily a quantitative science and those who maintained that it was a behavioral sci-ence It has become clear that one cannot adequately manage a project without depending heavily on both mathematics and the science of human behavior To contend that mathematics

is exact and that behavioral science is “mushy” is to ignore the high level of subjectivity in most of the numeric estimates made about the times, costs, and risks associated with projects

On the other hand, to assert that “people don’t really use that stuff” (mathematical models) is

to substitute wishful thinking for reality For nonmathematicians, we have computers to help with the requisite arithmetic For the nonbehaviorists, there is no help except hard work and

an accepting attitude toward the subject

Before undertaking a journey, it is useful to know what roads are to be traveled While each individual chapter begins with a more detailed account of its contents, what follows

is a brief description of chapter contents along with their organization into three general areas: project initiation, project planning, and project execution Following this introductory

chapter, the material in Part I focuses on project initiation We realize that many instructors

(and students) would rather get to the basics of managing projects, and that can be done

by moving directly to Part II of the text However, we believe that without understanding

the context of the project—why it was selected and approved, what project managers are

responsible for and their many roles (such as running a team and negotiating for resources), the importance of the Project Management Offi ce, and where (and why) the project resides

in the organization’s hierarchy—a PM is courting disaster Chapter 2 starts with a description

of the concept of project management “maturity,” or sophistication, and how fi rms can ate their own competence in project management It then details the problems of evaluating and selecting projects, as well as the information needed for project selection, the manage-ment of risk through simulation, and some of the technical details of proposals The chapter concludes by expanding the concept of project selection to strategic management through judicious selection of the organization’s projects by means of an eight-step procedure called the “project portfolio process.” Chapter 3, “The Project Manager,” concerns the PM’s roles, responsibilities, and some personal characteristics a project manager should possess It also discusses problems a PM faces when operating in a multicultural environment Next, Chapter 4

evalu-covers a subject of critical importance to the PM that is almost universally ignored in project management texts: the art of negotiating for resources The chapter also includes some major sources of interpersonal confl ict among members of the project team Concluding Part I of the book, Chapter 5 concentrates on establishing the project organization Different organi-zational forms are described, as well as their respective advantages and disadvantages The staffi ng of the project team is also discussed.

In Part II we consider project planning This section of the text discusses the essentials

of planning the project in terms of activities, costs, and schedule Chapter 6 deals with ect activity planning and presents tools useful in organizing and staffi ng the various project tasks It also contains a short discussion of phase-gate management systems and other ways of dealing with the problems that arise when multidisciplinary teams work on complex projects

proj-Because of its importance, budgeting is addressed next in Chapter 7 Scheduling, a crucial aspect of project planning, is then described in Chapter 8, along with the most common sched-uling models such as the Program Evaluation and Review Technique (PERT), the Critical Path Method (CPM), and precedence diagramming Concluding Part II, resource allocation

is covered in Chapter 9 For single projects, we discuss how the resource allocation problem

concerns resource leveling to minimize the cost of the resources; but for multiple projects,

we learn that the issue is how to allocate limited resources among several projects in order to achieve the objectives of each

Part III of the text then gets into actual project execution Chapter 10 examines the

infor-mation requirements of a project and the need for monitoring critical activities Included in this chapter is a description of some common Project Management Information Systems (PMIS) In general, it is not possible to manage adequately any but the smallest of projects without the use of a computerized PMIS There are many such systems available and several

are briefl y discussed, but in this book all examples using PMIS will use Microsoft Project®

(as well as Excel® and other software made to interact easily with Microsoft Project® and

driving force in the development of project management software, there is a wide variety of PMIS available We must add that to use any project management software wisely, the user must understand the principles of project management Chapter 11 then describes the control process in project management This chapter covers standards for comparison and tools to help the manager keep the project in control Chapter 12 deals with methods for both ongoing and terminal audits and evaluations of a project, as well as identifying factors associated with project success and failure Chapter 13 describes the different forms of project termination, such as outright shutdown, integration into the regular organization, or extension into a new project Each of these forms presents unique problems for the PM to solve

The subject of risk management and its component parts, risk management planning, risk

identifi cation, risk assessment, risk quantifi cation, risk response development, and risk toring and control (Project Management Institute, 2004), is given extensive coverage through-

moni-out this book We considered the addition of a chapter specifi cally devoted to the management

of risk, but the fact that risk and uncertainty are inherent in all aspects of project life led us to incorporate discussions of risk management when they were relevant to the problem at hand

Determination of the sources and nature of risks that might affect a project is risk tifi cation and, in our opinion, should be the subject of an ongoing analysis carried out by the project council, the Project Management Offi ce, and the project team itself Risk identifi ca-tion, therefore, should be embedded as a part of any project, and we deal with the subject in Chapter 5 when we discuss project organization

iden-Risk analysis, a term we use to cover both risk quantifi cation and risk response planning,

is devoted to estimating the specifi c impacts that various uncertainties may have on project outcomes The techniques used to estimate and describe uncertain outcomes vary with the

1.4 THE STRUCTURE OF THIS TEXT 21

This chapter introduced the subject of project management

and discussed its importance in our society It defi ned what

we mean by a “project,” discussed the need for project

man-agement, and described the project life cycle The fi nal

sec-tion explained the structure of this text and gave an overview

of the material to be described in coming chapters

The following specifi c points were made in the chapter

• The Project Management Institute (PMI) was founded

in 1969 to foster the growth and professionalism of project management

• Project management is now being recognized as a

valuable “career path” in many organizations, as well as a way to gain valuable experience within the organization

• Project management, initiated by the military, provides

managers with powerful planning and control tools

• The three primary forces behind project management

are (1) the growing demand for complex, customized goods and services; (2) the exponential expansion of human knowledge; and (3) the global production–

consumption environment

• The three prime objectives of project management

are to meet specifi ed performance within cost and on schedule

• Our terminology follows in this order: program, project, task, work package, work unit

• Projects are characterized by their importance, cifi c end results, a defi nite life cycle, complex inter-dependencies, some or all unique elements, limited resources, and an environment of confl ict

spe-• Project management, though not problem-free, is the best way to accomplish certain goals

• Projects often start slowly, build up speed while using considerable resources, and then slow down as completion nears

• This text is organized along the project life cycle concept, starting with project initiation in Chapters 2

to 5, where selection of the project and project ager occurs and project organization begins Project planning, Chapters 6 to 9, is concerned with activity planning, budgeting, scheduling, and resource alloca-tion Project execution, covered in Chapters 10 to 13, relates to actually running the project and includes activity monitoring and control, auditing and evalua-tion, and fi nally project termination

man-Deliverables The desired elements of value, outcomes,

or results that must be delivered for a project to be

consid-ered complete

Interdependencies Relations between organizational

functions where one function or task is dependent on others

Life Cycle A standard concept of a product or project

wherein it goes through a start-up phase, a building phase, a

maturing phase, and a termination phase

Parties-at-Interest Individuals or groups (the

stake-holders) with a special interest in a project, usually the

project team, client, senior management, and specifi c public interest groups

Program Often not distinguished from a project, but frequently meant to encompass a group of similar projects oriented toward a specifi c goal

Project Management The means, techniques, and cepts used to run a project and achieve its objectives

con-Risk The chance that project processes or outcomes will not occur as planned

Stakeholder see “Parties-at-Interest.”

SUMMARY

GLOSSARY

particular problem at hand Determination of the impact of risks on the project selection cess, for example, is signifi cantly different from a study of the impact of risks on project bud-gets or schedules Each will be considered in its appropriate place The use of Decisioneering’s Crystal Ball® (enclosed with this volume) will greatly simplify the mathematical diffi culties often associated with risk analysis

pro-With this introduction, let us begin our study, a project in itself, and, we hope, an ing and pleasant one